E-Commerce with an emphasis on Social Technologies
Today I want to talk about the future of, not just online quoting and enrollments, but online administration.
Yesterday I met with a dental products third-party administrator (TPA) who markets dental products through brokers. This company handles all the administration, including policy administration, issuing cards, settling claims, and dealing with dentists.
The TPA has been implementing Phase One of a new browser-based back-end administration system that’s to be launched next month. Their goal is to use technology to differentiate themselves in a “commodity market”. His terms, his buzzwords, were faster, better, cheaper. Now he’s speaking my language! I often say “better, faster, cheaper” to describe the integration of Web-based technology into insurance systems.
He said there are three things you can compete on – speed, quality and price. However, you can only pick two. So you can do it cheap and fast, but it won’t be good, etc. etc.. In the dental market, you can’t compete on price. You can only compete on speed and quality. So they’re using the technology to move administrative processes forward. What that means is broker self-service, consumer self-service, and provider (dentists) self-service. All of these people are more than happy to do their own data entry (faster, cheaper), including who they are, what they are interested in, and so forth. They are also more than happy to do electronic billing, claims, etc. (faster, cheaper).
So the TPA is positioning itself to dramatically reduce labor costs and postage – two of their biggest costs. That’s not to say they are planning to lay people off. They are positioning themselves to handle more business. It’s also going to position themselves for great competitive advantage in serving their main client, the broker, who will be able to tell their customers, “You don’t have to fill out paper. The work can be done online, employees can enroll online, and so the service level with the TPA is enhanced.” “It’s all very high security, very flexible, and it provides an integrated solution for all sections of the business,” the TPA said.
As far as the underlying infrastructure, Phase Two will deal replacing the back end. Right now, they are focused on Web-enabling customer-facing front-end functions with hooks into the back-end.
So what does all this mean? It’s using technology to increase competitive advantage to add value, reduce costs, do more with the same people, and thus be more profitable and competitive. And it’s flexible to meet the needs of any insurance product in any variety of distribution. Very cool.
The guy finished with a haunting comment: “Insurance execs need to ask themselves this, ‘What’s going to happen if I don’t do this? Are we going to be able to compete when price is no longer an option? Or will we just sell out and do something else?’”
Browser-based operating systems for insurers are NOW!